Could your nephew bring his 360 to your house, connect to your internet and buy the game? It would need to be done on his gamertag - you could buy him an ms points card if you want to pay for it. It would then work offline when he takes it back to his house (unless he ever changes to a different 360)

Edit - You will need to sign him up for XBL if he is not already on there (go for the free silver account)

Well he could buy it on someone elses xbox with his gamertag and transfer it on a memory stick and onto his xbox, i think that should work

This will not work. The DRM allows you to use it on the console where it was bought, or whilst online with the gamertag you purchased with. You can only play offline on the console that you used to buy it.